COVID-19 and Forbearance – How to PROTECT your credit

How to avoid credit damage and the need for credit repair.

COVID-19, otherwise known as the Coronavirus, is causing many consumers to have disruptions in their income.

Many of these consumers are facing financial hardship and may have options available to help them alleviate financial stress during these uncertain times. Creditors may offer debtors who are facing a financial hardship a forbearance option to help out.  It is important for those with debts to understand what a forbearance is, how can it help them, and how it will it impact their credit.

What is forbearance?

A forbearance is when your lender approves to temporarily postpone, suspend or pause all or part your payment obligation(s).  Keep in mind that it is common for your interest to continue to accrue during any forbearance period and your loan balance may increase.  Due to the current heath pandemic we are facing, some lenders are offering exceptions and are eliminating interest charges during any forbearance periods.  It is vital to call your lenders to see what help is available.  It would be wise to document, in writing, any forbearance and/or interest exceptions you get.  Keep all correspondence, including emails and texts, and written notes in a safe place in case you need them at a later date.

How can forbearance help you?

In times of a financial hardship, the ability to forbear an obligation may help you maintain other vital living expenses.  As an example, by forbearing a mortgage, automobile or student loan payment during a financial hardship, you can use those funds for basic necessities like rent, groceries or utilities.

Will a forbearance impact your credit score?

If you are required to make reduced payments during any forbearance period, you must make these payments timely or you should expect your credit score to suffer.  The credit reporting system has special coding for lenders to identify an account that is in forbearance.  The presence of such coding is not derogatory to your credit score.

Calculating the benefits of a loan forbearance.If you are facing a financial hardship, speak to your lenders and ask them what options they have available to help you.  If you qualify for forbearance, you should be able to avoid any credit damage.  It is very important to get any forbearance agreements in writing, and keep them,  in case your lender does not report your account accurately to the credit reporting agencies.  Should errors occur, any written correspondence will help with repairing your credit.

Cure My Score is a full service credit restoration company that has been helping consumers with successful and affordable credit repair since 2008.  If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional credit repair company like CureMyScore.com for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new automobile while paying less in interest charges.

Call us at 412-564-5370 with any questions / comments or schedule a free program review.  Like us on Facebook to receive future consumer credit tips.

 

New credit scores are coming; will they help or hurt you?

change to credit score

The credit scoring giant FICO recently announced that they are planning on releasing their newest score models, FICO10 and 10T Suite, later this year.

The FICO 10 score model will continue to have the same score ranges and use the same 5 major factors in determining a credit score as previous models.  It is reported that consumers with recent late payments, high credit utilization (the amount owed on revolving debts compared to the limits) and possibly personal (unsecured) loans will likely see a negative impact to their credit scores.  Conversely, consumers with no late payments, low credit usage and no personal loans likely will see an increase to their credit scores.

The difference between the FICO 10 and 10T models is that 10T will take into consideration trending data.  Trending data takes into consideration your actual payments vs. the minimum required payments as well as balances.   Up to this point, FICO has never used trending data in their scoring models.  So, is your unsecured debt level trending up or down (don’t factor in student loan, mortgage or auto debt)?  Do you pay off your credit cards each month or do you only pay the minimum or a partial balance payment?  Is your total unsecured debt growing or is it in good shape?  Consumers that pay off their unsecured debts in full each month and refrain from opening new unsecured loans should expect trending data to help their score.  Conversely, consumers with high credit utilization and/or the presence of new unsecured loans should expect trending data to hurt their scores.

If you have a lot of unsecured debt, you would be best served to work out a budget and a plan to work on reducing your unsecured debt level.  Paying this type of debt down, or off, should help you with your FICO 10 and 10T as well as save you money on interest charges.  Keep in mind the word “trend”.  Even if you can only pay your unsecured debt down slowly, you will still be trending lower, which is good.

In summary, pay your bills on time on time and keep your unsecured debts to a minimum and you should do just fine with your credit score.

Consumers need to understand that many scoring models are commercially available to lenders.  Lenders choose which model works best to measure their risk in lending.  It is VERY common for consumers to have different scores with each scoring model.

If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional company like CureMyScore.com for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.

Call us at 412-564-5370 with any questions / comments or schedule a free program review.  Like us on Facebook to receive future consumer credit tips.

 

Consumers Apply for Loans WITHOUT Knowing

Did you ever hear the saying that nothing is free?

Every consumer should be very careful on providing the numerous free credit/lending websites their personal information.  So many consumers fail to understand that with the exception of annualcreditreport.com, most, if not all, of the free credit/lending providers are actually marketing companies.  These marketing companies use your personal information to make you credit offers; they then make money when you apply for and/or open new credit.  Seeing that I educate consumers on how to improve their credit, I subscribe to a number of these free sites purely to understand how they operate so I can better warn consumers of some of their pitfalls.  I now get MANY emails daily about applying for loans, getting out of debt, how to better manage my money and how my credit score changed.  REALLY? I have an A+ credit score and I have no revolving debt.  I have ZERO need for these companies’ advice.  Since I know better, these marketing companies don’t make money off of me.

At Cure My Score, we often have clients who complain about having unauthorized credit inquiries.  At times, they fear their data was hacked and an ID Thief was trying to steal from them.  Perhaps all they did was unknowingly  apply for credit?

Below is a photo from an email I received today from one of these free web marketers.  I cut off the bottom of the email where in part,  it displayed my entire name, address and the month and year of my birth.

 

As a consumer, I have a number of issues with this email, as well as with the many other similar emails I get daily.

Why my credit score went down.

 

  • I never asked for, needed or requested money from this site. I find it odd asking me if I still need money.  I assume they want the catchy question in LARGE PRINT as well as the email subject line.
  • If I were to click on any dollar amount in this email, whether by accident or out of curiosity for more information, they will consider that single click as an application. They may instantly send my personal information to up to 5 lenders who can then obtain my credit and solicit me with loan offers.
  • In the fine print of this email it discloses “In order to provide you with an expediated loan process, we are submitting the following information to our network of lenders:”, they then display my name, address and birth date.
  • In the super fine print it states “By using 1-Click and clicking on a loan amount above, you consent and agree to the following:”; part of this consent is agreeing that to up to 5 lenders may obtain my credit report or other infromation from the credit bureau(s) about me.
  • The email itself provides a great deal of my personal information. If my email were to be hacked, I would not want a hacker to have access to this email containing my personal information.

I don’t want a marketing company to send my personal information to their “network” of lenders.

I don’t know if this network of lenders will make hard credit inquiries which will hurt my credit score nor do I know what they will do with my personal information.

Let me be very clear, if I want to borrow money for any reason, I will choose the bank I want to deal with and inquire about any loan options that serve my needs.  If I then decide to request a loan, I will take the few minutes that it takes and apply for it and knowingly give consent to have my credit pulled.

If you provided your personal information to any of these free websites, you have the option to contact them and unsubcribe to their services.  Some of the free websites that give your regular access to your credit reports can be beneficial if you are in the process of repairing your credit.  If this is the case, consumers should be very careful on what links they click.

If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact an experienced professional company like CureMyScore.com for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.

Call us at 412-564-5370 with any questions / comments or schedule a free program review.  Like us on Facebook to receive future consumer credit tips.

Equifax Settlement Options – I am choosing #5, the one no one is talking about.

Understand how to have the best credit scores.

The way I see it, impacted consumers from the 2017 Equifax data breach will do 1 of 5 things.  Which one is best for you?

  1. Do nothing. Sadly, many consumers will do nothing and they will get limited benefits from the settlement and will lose their right to take action in the future against Equifax should they later be impacted from this data breach. If you do nothing, you still can get assistance with free identity restoration services.
  2. File a claim for the $125 cash payment. Sadly, right after Equifax announced their proposed settlement, millions of consumers quickly filed claims to receive their $125 cash payment. It was quickly learned that the $125 offered cash payment may end up being mere pennies.   Consumers can also seek reimbursement of up to $25 per hour for time spent dealing with the data breach.  I expect the time spent dealing with this breach may be hard to prove and this fund is also expected to pay only a small amount due to the expected number of reimbursement submissions.
  3. File a claim for free credit monitoring for up to 10 years. To me, this is certainly a better option than the $125 cash payment that will actually be much less. Free credit monitoring has been offered by a number of marketing companies for some time so this option may not provide much value to many consumers.
  4. File a claim for cash payments up to $20,000. You can seek cash payments to recover money you paid as a result of the breach.  This includes losses from unauthorized charges, the cost of (un)freezing your credit report, the cost of credit monitoring and other expenses paid to other business professionals.  While $20,000 sounds like a great deal of money, in many cases, the cost and damages of recovering from ID Theft far exceeds this amount.
  5. Opt Out. Any consumer who was part of the breach has the option to Opt Out of the settlement. The deadline to Opt Out is November 19, 2019.  As I see it, the biggest benefit of Opting Out is you do not lose your right to sue Equifax related to this data breach.  In a perfect world, this data breach will not cause you, me or anyone to be a victim of ID Theft or other related woes.  Who knows what the future holds since cyber criminals are always getting craftier on how to use stolen personal data for their gain.  If you choose to Opt Out, you can do so by mailing a statement containing:
    • The name of the proceeding “Equifax Inc. Customer Data Security Breach Litigation, Case No. 1:17-md-2800-TWT”
    • Your full name and current address
    • At the top of the document, the words “Request for Exclusion” or a statement that you do not wish to participate in the settlement.
    • Your signature.
    • Mail, postmarked no later than 11/19/19 to:

Equifax Data Breach Class Action Settlement Administrator

Attn: Exclusion

c/o JND Legal Administration

P.O. Box 91318

Seattle, WA  98111-9418

I suggest that each impacted consumer should either file a claim or Opt Out.  For me personally, I choose to Opt Out.  The benefits I would get today from filing a claim is not worth me losing my right to take future action against Equifax should the need arise.  You can get more information related to filing a claim or how to Opt Out from the FTC or Equifax Settlement websites.

If your credit needs some help, take action. There are a lot of resources available on steps to improve your credit. You can get free information from the FTC or contact a professional company like CureMyScore.com for help. By taking action to improve your credit, you may qualify for the home of your dreams or a new auto while paying less in interest charges.

Call us at 412-564-5370 with any questions / comments or schedule a free program review.  Like us on Facebook to receive future consumer credit tips.